Author Saqib Iqbal Ahmed
New York (Reuters) -It seems that dollar bulls in hibernation are after sharp selling in Greenback about the care of growth in the US, but some investors think that the tariffs still have the power to support the American currency.
The dollar has been reduced by about 5% of January, US President Donald Trump’s inauguration and four-month-old low, as the titles of US trade tariffs have been feeding concerns about US growth. The German incentive of a fiscal consumption has also made its chances of Europe, further progressing dollar because investors shift capital to economics are considered to be a stronger growth potential.
In addition, in the Futures Currency markets, investors have reduced net long positions to $ 15.3 billion from a nine -year maximum of $ 35.2 billion in late January.
Investors selling a dollar are worried about the tariff that slows down the US economy by increasing the costs of businesses and consumers, interfering with the supply chains and reducing the amount of trade.
Still, some investors do not see it as a time to sell dollars.
“I do not think that the planets were aligned with the bears market in dollars,” said Paresh Padphyyaya, director of a fixed income strategy and currency strategies at Amundi US.
The dollar could still use the gain while the tariffs are fully implemented, analysts said, noting that the tariffs could reduce demand for foreign currencies by increasing the costs of importing foreign goods, which inserted the dollar to strengthen.
In addition, many factors that have become a higher US dollar last year remain in force, said Amundi’s Brokenhyaya.
Although the growth of the US can show signs of slowing down, it remains strong compared to other large economies, he said. The dollar still boasts a relatively high yield. Despite the poor recent effect, investors are still looking at Greenback as a safe haven at the time of global unrest.
“I still think the dollar is the king,” said Padphyyaya.
The dollar bears were punished in the recent past for premature betting against Buck. Over the last two years, the dollar index fell about 5% from the short-term peak twice-Okod-Party-December 2023 and April-September 2024. In both cases, the dollar recovered within a few months.
Regardless of the post-exhibit dollar set, close to 5%, strategies are skeptical that markets are completely priced in potential progress that could be collected dollar from full multiple tariffs for a long time.
“We are at the camp of those who expect a relatively long period of tariff, especially when Europe is Meta,” said Francesco Pesole, a forex strategist at Ing in London.
